The 6 stages of start-up to scale-up business

I wanted to share with you my 6 stages of start-up to scale-up business. They are:

1. The Start-Up Phase

2. The Sales Phase

3. The Staffing Phase

4. The Survival Phase

5. The Scaling Phase

6. The Sustainability Phase

So, as you can see I’ve started them all with the letter “S”, thanks to the Thesaurus for helping me out there. Now, I want to make starting and scaling any business: a part-time business, a full-time business, a lifestyle business or an empire business. I want to make them as safe, clear, and as simple as possible FOR YOU.

So, before we dig into a little bit more detail on these 6 stages and facets all beginning with “S” for starting and scaling any business, I think there are 3 main types of business that you might start, or you might scale.

The first one, is, a part-time business side-hustle. You already have a job, or a career, or even one main business, but you have an interest on the side. A lot of my clients, they have a job, but they like to invest in property on the side for their pension. A lot of my clients also like to have ecommerce businesses or online businesses, where they sell things evenings and weekends. But they have a job or a passion or a profession, that they want to do. You know what? A lot of time, in the personal development world, there’s everyone saying, ah, you’ve got to sack your boss. You’re a loser, if you work for someone else. Well, actually, I don’t agree with that. I think that, if you already have a passion, a profession, if you like your job, or if you’ve got big overheads, and houses, and mortgages, and families, and 15 kids in private schools, you know all that other stuff, you don’t necessarily want to fire your boss on Monday morning, and go, hoohoo, what do I do with my life? Just because someone, some ra-ra motivational speaker told you to do so.

Often, starting up a part-time business, is, a good sort of segway into then making it more full-time once you’ve built at the back, an income stream, and there’s a bit of conflict between the 2 businesses. Because the thing that you’re doing is starting to get a bit in the way of your part-time business. In that case, at that point, then you can consider having it as a full-time business.

The second type of business is a lifestyle business. Now, I’d define a lifestyle business as one that’s geared more towards creating a lifestyle for you, but not for scalability and global domination of any mature nature. So, that might be a business you run from your laptop, or your phone with the apps that you use. It’s one way you’re looking for an income stream of 3, 5, 10, 20 grand a month. But you’re also looking for not 30, 50, 100 hours a week or whatever.

Now, there’s a upside and a downside to most things, all things that we do. So, lifestyle business is great, because you can make it more systemised. You can run it like, I said remotely from your laptop. You can run it in any country in the world. You can keep it pretty lean on the overhead. You don’t have a load of staff. But that’s not going to make you millions, and millions, and millions, or billions.

When you get to a certain size in business, a good few hundred grand of turnover, you do need staff. I know some people don’t want staff. That’s fine. That means you need to systems, and VAs, and outsourcers. But that does limit your scale. You know that I’m not sitting here saying, that’s right or wrong. I’m just saying that is.

So, do you want a lifestyle business, which is where you value your time the most, and that you value your freedom? You have other passions and hobbies that you want to do. Business and income are means to an end, because there are other things that you want to do with your life. That’s cool. Of course, I do a lot of content on this Podcast and on The Disruptive Entrepreneur Podcast. I’ve wrote Life Leverage. So, hey, if that’s the road you want to go down, go down it. I can help you.

The third type of business, is, an empire business, or empire builder entrepreneur. That’s someone who wants to build big, meaningful things that last. They want to build castles. They are quite happy with hiring staff, going global, really sort of building a big enterprise, making something meaningful that matters, that outlives them, and outlives their kids and grandkids. Again, it’s not right or wrong, but some of us have got that in us.

I’ve retired. Goodness knows, how many times. I’m very well practiced in retiring, because I’ve retired so many times. I’ve had a part-time business and a lifestyle business. In the end, all I wanted to do, was, the thing I’ve retired from. I love business. I wanted to do it for the rest of my life. I want to write books. I want build things that last way beyond my life. I love the thrill of that. Yeah, so for me, having a business empire or being an empire builder by definition.

Now, I don’t so much need to be a billionaire anymore, or have a branch of my business in 200 countries. It’s not just about the size. It’s about the performance, and the way that you do it in your lifestyle. I don’t like to switch off from business. People always saying to me, Rob, you should switch off. You need to take a few days off. Why? You should enjoy your holiday. Well, holiday for me, is just being able to think with a bit more time, in nicer weather about my business and my enterprise. Like, I’ve just let go of feeling guilty about that, because that’s just WHO I AM.

Okay, so, you can choose which one of the 3, you’re going to follow in terms of a model: a part-time or side-hustle, a lifestyle or an empire builder. Okay then, so, I’m going to give you some top line credentials of these 6 stages and facets of starting and scaling a business. Then in some future Money Podcast, I’ll probably detail each one, because I think that they warrant a good deep dive. I think you’ll get the best benefit, if we do it that way.

1. The Start-Up Phase

So, the Start-Up Phase, is obviously the phase, where you’re looking to create your product. You’re looking to disrupt the market. It’s wise to keep overhead lean. It’s wise to be agile, and not put too much stress on your time, or the overhead. Of course, it’s the riskiest part of the business. But it’s also, should be the most exciting part of the business. A lot of people are always looking for, you know, I want to be bigger and better. I want to make more money, that they forget to enjoy that start-up phase, where you can pivot really quickly, where you can make a decision today, and implement that strategy today, rather than the next tax year, only just starting this tax year.

Of course, it’s crazy. It’s chaotic. It’s risky. But it’s also exciting. You’re blissfully, naively unaware of all the disruptions and difficulties in your market, your niche, because you’ve never been there before. It takes that craziness, that naivety to get us to do this. Because you hear a lot of very successful business owners say, well, if I would have known then what I know now, I probably would had never started. So, sometimes, it’s okay to be naïve, and exciting, and enthusiastic, and passionate, and not having all the answers. By just going out there, and being just transmuting that energy, and that enthusiasm into people. I definitely recommend that you don’t take on massive overhead. You don’t necessarily go and raise a load of money, take a load of loans, buy a load of equipment, because that just puts pressure on your ability to grow.

2. The Sales Phase

The next stage then, is, the Sales Stage. By the way, these stages are in order. But some of them, you can do concurrently, and they overlap. So, you don’t have to start up for like, 3 months, and then after 3 months, go, oh, I tell you what, I sell something now. You can sell something on day one of starting your business. But a lot of people focus on brochures, branding, collateral, getting all their ducks in a row, getting everything perfect. Oh, I’ve got to make a nice website. Oh, I’ve got to have all of my receipts, and finances, and all of the systems and processes in place before I go and open the shop doors. They’re dressing the window rather than open the door, and letting people in, and selling them stuff. One of the greatest ways to grow a business and sustain a business, without giving shareholding away, or without putting massive stress on the overhead, is, to finance your cash flow, which is sell some stuff, reinvest some of the profits, and draw some of the profits.

Mark and I tend to reinvest about 50 percent of the net profit, and draw about 50 percent of the net profit of our businesses. So, ultimately, there are two most important functions of any business, I defy anybody to say that any other parts are more important. Of course, all parts of our business that makes, the other COGs that make the gears and the engine run are important, but sales and marketing. So, if you have a shop put, then of course, the stock, and the cashier, and the window dressing, and the lease, and the accounting, that’s all important. But getting people in the door of the shop, which is marketing, and getting people to buy your products and put money in the till, which is sales, are, the two most important things. So, don’t put all your ducks in a row, before you start selling stuff. Start selling stuff and get perfect later.

3. The Staffing Phase

Okay, so, Stage 3, is, Staffing. Now, you may want to in-source or outsource. You might want to hire a PA, and then an Office Manager. Then ultimately, an Operations Manager, and then ultimately, an MD, and then a Sales Team and a Marketing Team, and a Finance Team. Now, if you’re an empire builder, you want to probably do that, because you want to build something that lasts. The upside of having staff, is, you create the culture. They’re in the office. They work for you full time. You could see what they’re doing. You can build this bond, this loyalty. The downside, is of course, stress on the overhead. You have to then become a Manager. That can be draining off your time and resources. Sometimes, entrepreneurs are great at telling everyone what to do, but they’re terrible at managing people, because they want the baby, and not the labour pains.

You, conversely, may want to outsource, if you want a lifestyle business. So, you may want VAs, and going on Fiverr and onlinejobs.ph and Upwork, and getting little designs done, and book covers done, and have copywriters, and people trawling, setting up all your social media, and registering, and managing all your apps and your software. Neither is right or wrong. Actually, modern businesses have a hybrid of both. I have one PA and one VA. So, I have both, one in the office, one out of the office. So, you could have a hybrid model. I think in some areas, you probably do want a real person with you especially, if you’re trying to pass down all your knowledge so that the business ain’t reliant on you, and then in some areas, they don’t need to be location bound like design, for example.

4. The Survival Phase

Okay, then stage 4, is, the Survival Stage. So, that’s where you get culture change, where you go through rapid growth, or you have your initial hit on your launches, and you sell well at the start. Then your product and service become normal, or you get disrupted by competition or regulation, or you have this sort of lack enthusiasm, because you go through stages yourself, or you’re going through a big divorce, or a big lawsuit, or something. Every business will have stages, where you have to just buttoned-down and survive, because there’s a recession, or there’s a massive legal threat, or there’s just some change that you’ve got blind-sighted by. If you’ve any business has been going long enough, you will have that. So, you have to manage the chaos. You have to create a narrative through that, to inspire, and motivate, and pick up your staff when they’re down, or when you go over from sort of small enterprise to a medium enterprise, and you’re hiring a lot more staff, and your culture changes, where there’s levels and layers of management. Or, when you change your culture, or change your product, or your direction.

Ultimately, you need to keep constant narrative. You can never communicate enough with your people and your customers, about where you’re going, and how you’re pivoting. Then just coordinating all that chaos into a vision and a direction, and articulating the messages of your products and services, and that change of direction in way that just keeps people on side, and keeps you from falling apart. I don’t know when that’s going to happen for your business. That could happen in the first week for 6 months. You could have a really good run for 2 years, and then something terrible happens.

I remember when half of my staff left in one go. We had 8 staff, and 4 of them left. All set up in competition. I remember when we hired our Operations Manager, and sort of a wall between us and the only sort of layer of staff between us and them, because we didn’t have all these layers of management and hierarchy. I remembered that being a real big conflict. Yeah, we’ve had a couple of relatively big tribunal cases, which didn’t quite get to court, but nearly did, which had some disruptions. We had one product that we had to sort of wind down. We had some challenges winding that down, and pivoting into a similar, but different model. Hey, look, every business goes through seasons and journeys. You have to sometimes, you have to stop the growth, and just survive through a period of time.

5. The Scaling Phase

Fifth then, is, Scaling. So, maybe, systemising your business so that you can hire up, or going into new markets, going into global markets, or creating more products and services. There are so many different ways that you can scale. When you scale, and you grow, and you’re aggressive, you could raise finance. You could get people on your Board, or have shareholders who’ve got really good contact and experience in your niche. All of these ways to grow your business, you’d have a big upside of growth. Then the downside, is, how do you manage that growth when things break, or you grow too fast? Actually, Stage 4 – Survival can come from Stage 5 – Growth, because you grow too fast, and then you have to pick up all the pieces. Now, it’s wise to scale, and to systemise, before you look to then become more mature and look to exit.

6. The Sustainability Phase

So, Stage 6, is, Sustainability, where you’ve already done some of your scaling. You’ve grown into markets. You’ve got a good capital value of your business. You’ve written all the systems and processes, the manuals for all the staff, the operations manual for the entire business, the video and audio training programmes, the business not being reliant on you at all to run. You go away for a month or two months, and the business survives and thrives without you. Having a clear strategy, do you want to scale, and just turn into a matured business? Then maybe, you want to hand it down to the Management Team or your children. Maybe, you want to sell to your bigger competitor in the marketplace. Maybe, you want to float on aim or another stock market. That’s the sustainability. So, Stage 6 is becoming mature, and deciding what you’re going to do with that business for the long term.

Summary

So, let me summarise these again. Then like, I said, what I’ll do, is, I’ll do a mini-series on each one. They won’t be back to back like the next 6 episodes. I’ll layer them in with other content, just to give you some variety.

I admitted I’d mentioned that you need a clear vision. You need to have an identity of the values. So, vision, values of your organisation, which they are a mirror of you and who you are, but put into a commercial and corporate narrative, if you like. So, you might have personal values of freedom, and choice, and family, and health, and travel. Then, how do you put those personal values into a more commercial or corporate enterprise, where you could still have freedom in your values? But you probably won’t have family in those values. But ultimately, the values of a business, are usually directly subordinating, and relatively to what the values of the founder of the business are. So, get clear on that vision and those values.

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So, all right, thanks for tuning in to The Money Podcast. Remember, if you don’t risk anything, you risk everything.